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The importance of Incoterms for international trade
Incoterms are
one of most important features of international trade, but sadly, one of the
most misunderstood: they feature regularly in the lives of a wide range of
people involved in exporting or importing (sales, customer service, purchasing,
accounts, freight and shipping personnel), but many do not appreciate the full
significance of the terms which they are dealing with.
The recent
tragic explosion in Tianjin in China is a case in point; pictures of damaged
shipping containers on quaysides or in container depots, tossed around like
matchboxes by the explosions, will stay in the memory of many people.
Less well
understood, but equally important, is the fact that for any UK exporters and
importers who may have cargo loaded in any of the containers damaged by the
explosion, the choice of Incoterm for their transaction may dictate whether
they will be directly affected financially by the horrific events.
Many people
associate Incoterms with freight charges; they are often used as a convenient
way of confirming which party is responsible for paying the various charges
associated with international transport: as such they are frequently utilised
by freight forwarders and carriers when issuing freight quotations or seeking
clarification of who will pay their fees.
However Incoterms cover a much wider range of responsibilities and
obligations for a seller and buyer in an international sales contract,
including:
• Which party is
responsible for loading or unloading goods, or for arranging and paying for
inspections to cargo?
• Who is
responsible for producing documentation, submitting export and import customs
entries, or arranging export and import licences, as well as a range of other
contractual obligations?
Using Incoterms
properly as part of a sales contract provides clarity for both parties, gives
certainty over costs, and reduces the risk of disputes and disagreements with
clients or suppliers. Using unsuitable
Incoterms, or using the terms without understanding the implications of your
choice can lead to unexpected costs, delays or unhappy clients.
The most recent
version, Incoterms 2010 consists 11 terms – a reduction from the previous
edition’s 13. These are: Ex Works (EXW), Free Carrier (FCA), Carriage
Paid To (CPT), Carriage And Insurance Paid To (CIP), Delivered At Terminal
(DAT), Delivered At Place (DAP), Delivered Duty Paid (DDP), Free Alongside Ship
(FAS), Free On Board (FAS), Cost and Freight (CFR) and Cost, Insurance and
Freight (CIF). Although these terms have
been in circulation for several years, it is still not unusual to find individuals
or companies who continue to use old terms, which no longer feature.
One of the most
commonly used, but misunderstood terms is ‘Ex Works’. This is often described by exporters as ‘the
easy Incoterm’, believing that it simplifies the export process by taking
responsibilities away from them. In
fact, under Incoterms 2010 (the latest version), using Ex Works in the wrong
circumstances can lead to problems and issues which can be far more dangerous
and costly for the business.
The importance
of understanding these rules – from both a seller’s and buyer’s perspective,
should not be underestimated. Without a
clear knowledge of the features, obligations and responsibilities for each of
the 11 terms within Incoterms 2010, traders may fail to choose the most suitable
Incoterm for their transaction, which, as in the case of Tianjin, may end up
costing them dear.
Source: http://www.freight-online.co.uk/sectors/sea/opinions/importance-incoterms%C2%AE-international-trade
It is 100% HRDF CLAIMABLE
Import, Export
Procedures, documentation & Incoterms 2010
19 & 20
February 2018 | Armada Hotel, Petaling
Jaya
Logistics Training 2018
JAN 2018
|
||||
LW047
|
Supply Chain Management in Global Operations
|
8-Jan
|
9-Jan
|
|
LW020
|
Best Practices in Procurement Management *SBL
KHAS*
|
25-Jan
|
26-Jan
|
|
LW008
|
Purchasing System & Administration
|
22-Jan
|
23-Jan
|
|
MG088
|
Quality Improvement Using 7QC Tools
|
15-Jan
|
16-Jan
|
|
LW004
|
Production Planning & Control
|
24-Jan
|
25-Jan
|
|
LW051
|
Pengurusan Gudang yang Efektif
|
24-Jan
|
25-Jan
|
|
FEB 2018
|
||||
LW002
|
Effective Stock Control & Warehouse
Management
|
12-Feb
|
13-Feb
|
|
LW003
|
Amalan Pengurusan & Penyelenggaraan Stor
|
12-Feb
|
13-Feb
|
|
LW032
|
Managing Bill of Lading in Global Shipping
|
12-Feb
|
13-Feb
|
|
LW042
|
Advanced Purchasing & Negotiation Skills
|
19-Feb
|
20-Feb
|
|
LW052
|
Import, Export Procedures, documentation &
Incoterms 2010
|
19-Feb
|
20-Feb
|
|
MAR 2018
|
||||
LW020
|
Best Practices in Procurement Management *SBL
KHAS*
|
12-Mar
|
13-Mar
|
|
LW013
|
Shipping Elements And Import Export Documentation
|
12-Mar
|
13-Mar
|
|
MG028
|
Principles & Techniques : Managing
Store/Warehouse & Inventory Effectively
|
19-Mar
|
20-Mar
|
|
LW012
|
License Manufacturing Warehouse
|
26-Mar
|
26-Mar
|
|
For more info please contact:
Norhidayah
Osman
014-223
7631
Email:
hidayah.o@comfori.com
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